17 Mar 2010

PPPs 'likely to appeal to experienced investors'

7:39 am on 17 March 2010

Analysts say raising funds from investors for private public partnerships is likely to appeal to professionals as the sector starts to slowly develop.

Investment bank Craigs Investment Partners is planning to raise up to $125 million to invest in a private fund that wants to build social infrastructure like schools, hopsitals and housing.

Craig's New Zealand Social Infrastructure Fund wants to cash in on the expected use of private public partnerships by the government.

The fund will invest in the Morrison and Co-managed investment vehicle, Public Infrastructure Partners, which already has a $100 million committment from the New Zealand Superannuation Fund.

The initial offer is for 50 million shares at $1 each, with the ability to accept another $75 million in oversubsription. The miniminum investment is $20,000 dollars.

Craigs Investment Partners managing director Frank Aldridge says he expects there to be an appetite from investors wanting to fund the development of social infrastructure assets.

He says it is likely to appeal to experienced investors as part of a broader portfolio.

Public Infrastructure Partners has not yet announced any projects it plans to invest in, but has previously said it won't invest in higher risk projects like roading where forecasting demand is risky.

Without any firm projects in the pipeline, some wonder whether smaller investors will be prepared to part with their cash.

The executive director of Milford Asset Management, Brian Gaynor, says a infrastructure projects are much more likely to attract institutional investors, such as pension funds.